Paying £2880 into pension when retired

Pat38493

FIREmenow said:

poseidon1 said:

scoobydoo8 said:

SVaz said:

Instead of keeping it in cash and getting 3.5%,  buy into a short term money market fund and get 5%+,  interest rates don’t look to fall below 4% any time soon.  

It would be better to front load it yearly with £2880,  do it now AND in April and you benefit even more.  

Interesting idea, but wouldn't buying a money market fund incur charges both on initially buying the fund then the ongoing fund management charges? Would that wipe out the increase in interest rate from buying a fund rather than leaving it as cash as holding cash in HL in a SIPP is free?

Can confirm that on a couple of recent money market fund investments i made the increase in HL fees noticeably erodes the 5% nominal yield, will therefore be dumping them as soon as the 1st quarterly divs are received. Holding funds in HL is a bit of a mug's game if low risk income is your preference. 
Funds make far more sense with the Interactive Investors platform and their fixed fees irrespective of portfolio size. 

HL tends to be recommended on this thread as most people want to hold cash and then withdraw most of it asap, which is fee-free.

Vanguard has announced they are also no longer charging fees on cash held in any accounts on the vanguard platform, so unless they have a very large pot, someone who wants fee-free cash and to invest in MMFs would now probably be better off at Vanguard than HL - platform fee is 0.15% versus 0.45%.

Vanguard would also probably be better than ii up to about a £100k pot if happy with Vanguard's offering.

Might vary depending on total assets held across all accounts on a platform.

So to be clear you are saying that with HL and Vanguard the % platform fee is only for invested money?  If it’s just in cash you don’t pay that fee but they still pay interest?

FIREDreamer

Pat38493 said:

FIREmenow said:

poseidon1 said:

scoobydoo8 said:

SVaz said:

Instead of keeping it in cash and getting 3.5%,  buy into a short term money market fund and get 5%+,  interest rates don’t look to fall below 4% any time soon.  

It would be better to front load it yearly with £2880,  do it now AND in April and you benefit even more.  

Interesting idea, but wouldn't buying a money market fund incur charges both on initially buying the fund then the ongoing fund management charges? Would that wipe out the increase in interest rate from buying a fund rather than leaving it as cash as holding cash in HL in a SIPP is free?

Can confirm that on a couple of recent money market fund investments i made the increase in HL fees noticeably erodes the 5% nominal yield, will therefore be dumping them as soon as the 1st quarterly divs are received. Holding funds in HL is a bit of a mug's game if low risk income is your preference. 
Funds make far more sense with the Interactive Investors platform and their fixed fees irrespective of portfolio size. 

HL tends to be recommended on this thread as most people want to hold cash and then withdraw most of it asap, which is fee-free.

Vanguard has announced they are also no longer charging fees on cash held in any accounts on the vanguard platform, so unless they have a very large pot, someone who wants fee-free cash and to invest in MMFs would now probably be better off at Vanguard than HL - platform fee is 0.15% versus 0.45%.

Vanguard would also probably be better than ii up to about a £100k pot if happy with Vanguard's offering.

Might vary depending on total assets held across all accounts on a platform.

So to be clear you are saying that with HL and Vanguard the % platform fee is only for invested money?  If it’s just in cash you don’t pay that fee but they still pay interest?

This is certainly true for Hargreaves and the rates aren’t too bad either.

https://www.hl.co.uk/charges-and-interest-rates

AlwaysLearnin

And Vanguard made changes this week (Wed 27th)

peteduk

FIREmenow said:

peteduk said:

Hello, I hope you don't mind a related but slightly off topic question on this thread.

I helped my wife in this process until she reached 75 though have never done it for myself. Thank you all for the support you give on this forum.

I am in receipt of my company pension and have a part time job where I pay into a defined contribution pension (my employer also contributes).

For FY2024-25 I believe I can open a SIPP and pay in the gross pay from my job minus my work pension contribution (without consideration of lifetime allowances, pension recycling, employer contribution etc).
This will then be 'uplifted' by 25% and I can then withdraw the rest after meeting any fees / requirements to keep the account open.
25% will be tax free and I will be taxed at 20% on the rest (I am a lower rate tax payer)

Is my understanding correct? If not please advise where I have misunderstood.

Thank you,

Peter

Hi Peter, 

My very basic thought was whether you have already triggered MPAA and if not, would triggering it be an issue for the pension you are paying into? Whether you've triggered it would depend on whether the pension(s) you've drawn so far are defined benefit or defined contribution.

I'm sure the knowledgeable posters will have more thoughts. You should probably start your own thread to make sure the people in the know see your question who might not look at this thread.

Thank you for the reply. The pension I've taken is defined benefit so does not trigger the MPAA. Therefore I am in no danger of reaching it. My non-pension earned income is <£10K so I believe I am ok to go ahead. A bit theoretical now due to recent bills but hopefully in the future......

Hal17

It's time to make the annual £2,880 payment into my wife's Vanguard pension.

However, she recently overheard a telephoner conversation I had with a Vanguard advisor before I could withdraw some tax free cash. It took over 30 minutes and was an absolute waste of time in my opinion. 

She just said I hope I don't need to do all that when I want to take tax free cash or draw some pension. She is not good talking on the phone and especially concerning financial matters which she leaves to me. Unfortunately, I know she will need too.

Does anyone have any experience of using someone other than Vanguard for their SIPP, where she might not have to go through all this? She is 69 and hopefully will have 6 more years where she would contribute the £2880 allowance. Many thanks.

molerat

With HL you can do the questions on line but the application to withdraw is paper in the post.

Start UFPLS application on line, answer questions, illustration and application form arrive in post next working day, fill in application and send off - first one will require ID and bank proofs to be sent - payment made in around 10 days.

zagfles

molerat said:

With HL you can do the questions on line but the application to withdraw is paper in the post.

Start UFPLS application on line, answer questions, illustration and application form arrive in post next working day, fill in application and send off - first one will require ID and bank proofs to be sent - payment made in around 10 days.

I've not taken a UFPLS but have crystallised two tranches with HL, the first time it involved paper in the post and probably ID etc, the second time it was all online and incredibly quick and easy. 

Easyjet77

Hal17 said:

It's time to make the annual £2,880 payment into my wife's Vanguard pension.

However, she recently overheard a telephoner conversation I had with a Vanguard advisor before I could withdraw some tax free cash. It took over 30 minutes and was an absolute waste of time in my opinion. 

She just said I hope I don't need to do all that when I want to take tax free cash or draw some pension. She is not good talking on the phone and especially concerning financial matters which she leaves to me. Unfortunately, I know she will need too.

Does anyone have any experience of using someone other than Vanguard for their SIPP, where she might not have to go through all this? She is 69 and hopefully will have 6 more years where she would contribute the £2880 allowance. Many thanks.

Hello,  I am with Vanguard. I only needed a brief phonechat for my first withdrawal,  thereafter it wasn't required. Nothing too painful and subsequent withdrawals pain-free.

Hal17

Thanks everyone - perhaps I was just unlucky with my Vanguard advisor. 

Pat38493

I think that with Interactive Investor everything can be done online (although probably you still have to fill outa  lot of online forms that could take half an hour or so).